Perception and

Individual Decision-Making

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Robbins and JudgeChapter 6

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PERCEPTION  

Perception is a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.

It is important to the study of OB because peoples’ behaviors are based on their perception of what reality is, not on reality itself.

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THE FACTORS THAT INFLUENCE PERCEPTION  

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ATTRIBUTION THEORY

Attribution theory suggests that when we observe an individual’s behavior, we attempt to determine whether it was internally or externally caused.

Determination depends on three factors: Distinctiveness Consensus Consistency

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ATTRIBUTION THEORY Internally caused - those that are believed to be

under the personal control of the individual. Externally caused - resulting from outside causes.

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ATTRIBUTION ERRORS Fundamental Attribution Error

We have a tendency to underestimate the influence of external factors and overestimate the influence of internal or personal factors.

Self-serving Bias Individuals attribute their own successes to internal factors.

Selective Perception Any characteristic that makes a person, object, or event

stand out will increase the probability that it will be perceived.

Since we can’t observe everything going on about us, we engage in selective perception.

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ATTRIBUTION ERRORS OR SHORTCUTS Halo Effect

The halo effect occurs when we draw a general impression on the basis of a single characteristic.

The reality of the halo effect was confirmed in a classic study.

Contrast Effects We do not evaluate a person in isolation. Our reaction to one person is influenced by other

persons we have recently encountered. For example, an interview situation in which one sees

a pool of job applicants can distort perception. Distortions in any given candidate’s evaluation can

occur as a result of his or her place in the interview schedule.

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ATTRIBUTION ERRORS OR SHORTCUTS

Stereotyping Judging someone on the basis of our perception

of the group to which he or she belongs. This is a means of simplifying a complex world,

and it permits us to maintain consistency. From a perceptual standpoint, if people expect to

see these stereotypes, that is what they will perceive.

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APPLICATIONS OF SHORTCUTS IN ORGANIZATIONS Employment Interview

Evidence indicates that interviewers make perceptual judgments that are often inaccurate.

Agreement among interviewers is often poor.

Performance Expectations Evidence demonstrates that people will attempt to

validate their perceptions of reality, even when those perceptions are faulty.

Self-fulfilling prophecy or Pygmalion effect characterizes the fact that people’s expectations determine their behavior. Expectations become reality. 6-10

APPLICATIONS OF SHORTCUTS IN ORGANIZATIONS

Performance Evaluation An employee’s performance appraisal is very much

dependent on the perceptual process. Many jobs are evaluated in subjective terms.

Subjective measures are, by definition, judgmental. What the evaluator perceives to be good or bad

employee characteristics or behaviors will significantly influence the outcome of the appraisal.

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THE LINK BETWEEN PERCEPTION AND DECISION-MAKING

Decision-making occurs as a reaction to a problem. Every decision requires interpretation and evaluation

of information. Alternatives will be developed, and the strengths

and weaknesses of each will need to be evaluated.

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MODELS OF DECISION-MAKING: RATIONAL 

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Assumptions of the Rational ModelThe decision maker has complete information; is able to identify all the relevant options in an unbiased manner; and Chooses the option with the highest utility. Most decisions in the real world don’t follow the rational model.

MODELS OF DECISION-MAKING: BOUNDED RATIONALITY  Bounded Rationality

Most people respond to a complex problem by reducing the problem to a level at which it can be readily understood.

Individuals operate within the confines of bounded rationality. They construct simplified models that extract the essential features.

How does bounded rationality work? Once a problem is identified, the search for criteria and

options begins. Identify a limited list made up of the more conspicuous

choices, which are easy to find, tend to be highly visible, and they will represent familiar criteria and previously tried-and-true solutions.

Once this limited set of options is identified, the decision maker will begin reviewing it.

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MODELS OF DECISION-MAKING: INTUITION

Intuition Intuition occurs outside conscious thought; it

relies on holistic associations, or links between disparate pieces of information; it’s fast; and it’s affectively charged, meaning it usually engages the emotions.

The key is neither to abandon nor rely solely on intuition but to supplement it with evidence and good judgment.

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COMMON DECISION BIASES OR ERRORS

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COMMON DECISION BIASES OR ERRORS Overconfidence Bias

Individuals whose intellectual and interpersonal abilities are weakest are most likely to overestimate their performance and ability.

Anchoring Bias Fixating on initial information as a starting point and

failing to adequately adjust for subsequent information. Confirmation Bias

Type of selective perception. Seek out information that reaffirms past choices, and

discount information that contradicts past judgments. Availability Bias

Tendency for people to base judgments on information that is readily available. 6-17

COMMON DECISION BIASES OR ERRORS Escalation of Commitment

Staying with a decision even when there is clear evidence that it’s wrong.

Randomness Error Decision-making becomes impaired when we try to

create meaning out of random events. Risk Aversion

Risk-averse employees will stick with the established way of doing their jobs, rather than taking a chance on innovative or creative methods.

Hindsight Bias Tendency to believe falsely that one has accurately

predicted the outcome of an event, after that outcome is actually known.

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ETHICAL DECISION-CRITERIA

Utilitarian criterion—decisions are made solely on the basis of their outcomes or consequences.

Focus on rights—calls on individuals to make decisions consistent with fundamental liberties and privileges as set forth in documents such as the Bill of Rights.

Impose and enforce rules fairly and impartially to ensure justice or an equitable distribution of benefits and costs.

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CREATIVITY: THE THREE-COMPONENT MODEL OF CREATIVITY

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Expertise

Intrinsic Task Motivation

Creative Thinking Skills Creativity

SUMMARY AND IMPLICATIONS FOR MANAGERS

Perception How do employees perceive the manager? How do employees perceive their jobs? How do employees perceive opportunity at the

company? Do employees distort reality?

Individual Decision-making Analyze the situation Be aware of biases Combine rational and intuition Enhance creativity 6-21